19837646 Seed Business Indian Scnerio

7/31/2019 19837646 Seed Business Indian Scnerio

http://slidepdf.com/reader/full/19837646-seed-business-indian-scnerio 1/8

SEED BUSINESS: Indian Scenario

INTRODUCTION

A successful variety of seed is one with a total balance of

traits that makes it more profitable for growers than any other

one they might choose.

- Lewis and Christiansen, 1982

Agriculture accounts for 28 percent of the GDP of India. With agrowth rate of 2.7 percent per annum since independence, it is

greater than the annual population growth rate.

Seed is a fundamental, crucial and yield enhancing input for

sustained growth in farm production. The role of the seed sector

is to ensure adequacy, seed quality and varietal diversity.

The Indian seed programme is still in its nascent stage. Out of

US$ 920 million sales, the domestic offtake accounts for US$900

million sales and the remaining US$ 20 million sales only accounts

for the global market.

Of the 90 million hectare area under food crops, a mere 10-12

percent area is under quality or certified seeds. ragmented landholdings and the lack of inputs force the farmer to use farm-

saved seeds. The success of the green revolution has however

helped to change the mindset of the farmers in a great way

regarding the use of high yielding seeds and ensured more

adaptability for hybrid seeds.

The use of hybrid seed is very low but awareness about the high

yield and good quality of product from hybrid seeds attracted the

farming community to switch over to new varieties and hybrid

seeds. The farmers' acceptance of modern technologies of farming

and availability of hybrid seeds in several regions is also a positive

indication for the growth of the seed industry.DEVELOPMENT O. THE INDIAN SEED INDUSTRY

The beginning of sorghum and pearl millet seed production and

distribution can be traced to the second decade of the 20th century.

The history of the sorghum and pearl millet seed industry is

intertwined with the birth and growth of the Indian seed industry

in general. To recapitulate history in a chronological order, there

are three major periods -- pre-independence (1900 - 1946), early

post-independence (1947-1959) and post-independence (1960-

1995) eras. The prominent milestones in the history of the

sorghum and pearl millet seed industry are the establishment of

the All-India Coordinated Project on Sorghum Improvement in1960, the All-India Coordinated Pearl Millet Improvement Project

in 1965, the establishment of the National Seeds Corporation in

1963, and the establishment of a seed company in the

private sector, the Maharashtra Hybrid Seed Company

(MAHYCO) in 1964.

To meet the gigantic demand of seed supply for a growing

population of over 50 crores, the World Bank supported the

National Seeds Project (NSP), that was launched in three phases

from 1975 to 1993. Thirteen State Seed Corporations (SSC) were

established to take over the production and distribution of quality

seeds in larger states. Both NSCs and SSCs were established to

take over the production and distribution of quality seeds in

larger states and expected to fulfill the needs of the farmers at

reasonable prices and on time. NSC contributes 5 percent with 3

percent value of the total market stocks handling 75 crops and

420 varieties to meet the needs of a wide segment of the farming

community suitable to various agro climatic zones and enjoys the

faith of the middle and lower segment of the Indian farming

community.

The actual process of deregulation of the government controls in

the seed industry started with the New Seed Policy of 1988.Subsequently, the private companies grew fast and currently there

is a 60:40 ratio between the private and public sectors. There are

more than 200 private seed companies of which over 30 percent

have global partners. The role of the 13 state owned corporations

has declined and they now deal with government notified

products.

WORLD SEED MARKET

There are about 1500 seed companies existing in the world but

the power distribution is highly skewed. Twenty four companies

control 50 percent of the commercial market and the concentration

is expected to increase further. The profits of these companies will be kept in check by strong competition and farmers using

farm-saved seeds, if the seed prices rise. Therefore, seed companies

are on the look out for new markets to increase their seed sales.

Source: Industry sources, Rabobank International

Spice is a bi-monthly publication from The National Institute of Agricultural Extension Management (MANAGE), an organisation of the Ministry of Agriculture, Govt. Of India.



Table:1 Seed sales and world market share of top ten seed

companies (2000)

Company seed sale Share of

(US $ million) world market

Dupont (Pioneer) $1,938 27.0%

Monsanto $1,600 22.0%

Syngenta (Switzerland) $958 22.0%

Groupe Limagrain (rance) $622 13.0%

Grupo Pulsar (Mexico) $474 6.5%

Advanta (UK and Netherlands) $373 5.2%

Dow (US) $350 5.0%

KWS AG (Germany) $332 4.6%

Delta Pine $301 4.3%

Aventis (rance) $267 3.7%

Source: RA.I, 2001

The total commercial market for seed at present is estimated to be

around US$ 30 billion. However, there is still a substantial Asian

market waiting to be tapped. The most important seed markets

are the US and the EU. In the recent past, the European market

has reached saturation and has experienced a 10 percent fall in

consumption in the last four years. However, consumption in

Asia is now increasing at an annual rate of 1.3 percent, and has

reached 43.2 million tons, out of which rice alone accounts for 16

percent. Asia has been the largest purchaser of agriculture seed

since 1990.

Table:2 Worldwide Export of major crop seeds (million US $)

Crops Seed Exports

Maize 530

Herbage crops 427

Potato 400

Beet 308

Wheat 75

Other agricultural crops 750

Horticultural crops 1150

Total 3640

Source: Seed Association of India

The major trends in the world seed market

l Intensifying international competition

l Shorter life cycle for new varieties

l Increasing R & D costs

l Increasing concentration within the food processing

and retail sector

The world population is expected to grow at a rate of 1.5 percent

by 2010, while yield increase for crops is expected to be around 1.3

percent. With income levels in Asia and the GDP in South Asia

growing at a rate of 5 to 10 percent per annum, there will be an

increased demand for food. With Europe reaching a saturation

point, Asia is set to emerge as the new market.

Table:3 Estimated values (million US $) of the commercial

markets for seed and planting material for top ten countries

Sr No Country Internal Commercial Market

1 USA 5,700

2 China 3,000

3 Japan 2,500

4 CIS 2,000

5 rance 1,370

6 Brazil 1,200

7 Germany 1,000

8 Argentina 930

9 India 900

10 Italy 650

World Total Commercial Seed Market 24,567


INDIAN SEED INDUSTRY

When the Indian seed industry is compared with the global

scenario, the estimated turnover ($ 900 million) is less than 2

percent of the global seed business of US $ 25 billion. With one

sixth of the world population and the second largest cultivableland, the Indian seed industry presents a poor picture.

There are many factors that influence these trends. Cultivation in

India is more self-oriented than market oriented. The average

farmer tries to grow as many commodities as possible on his

land, regardless of the economics of production. The farmer

prefers to grow more than one variety of even the main crop as a

risk aversion measure. Catering to these varied needs in different

parts of the country is definitely a daunting task for the seed

industry, though it also holds great promise.

With world trade expected to reach US $ 75 billion by 2020, India

can easily walk away with a major chunk of the seed industry with

careful planning and smooth regulations.

Seed production in India is different compared to the developed

nations. Multinational companies in developed nations carry out

the seed production on their own farms. In India, however, it is

mainly carried out in the farmer's fields under a contract. While

this ensures better returns for the seed growers, it adversely affects

the quality of seed. Majority of the Indian farmers being small or

marginal, seed production is distributed over a large area, which

not only results in the lack of uniformity in the seeds but also

leads to contamination. Maintaining varietal purity in such cases

becomes difficult.



rom the graphs above it can be seen that a large area in some crops is still being sown with farm-saved seed. Thus, private companieshave good scope and opportunity to sell seeds.

In the public sector, there are 13 state seed corporations, 20 state seed certification agencies, and 96 state seed testing laboratories inaddition to the National Seeds Corporation of India.

Table:4 Key Indian Seed Players

Company Holding Structure Turnover .ocus

Mahyco Monsanto - 26% 1000 All crops

HLL Unilever - 51% 700 All crops

Proagro Aventis 600 All crops

Ankur 400 Cotton, vegetables

Namdhari Seeds 500 Vegetables

Advanta Advanta & ITC (50% each) 380 Sunflower, corn, cotton, millets

Syngenta Syngenta 350 Sunflower, cotton, vegetables

Indo-American amily 300 Vegetables

Mahendra Hicks Muse Tate & urst 300 Millets, cotton

Spic-PHI POC - 100% 250 Corn, millets

Cargill Monsanto - 100% 200 Corn, sunflower

EID Parry amily, Monsanto - 51% 10 Sunflower, cottonNath Nath Group Cotton, millets, corn

Total 9000

The area growing commercial seeds


Source: Industry sources, Rabobank International Source: Industry sources, Rabobank International

Crop breakdown by value

Vegetables

18%

Others

14%

Paddy

12%

Sunflower

13%

Cotton

13%

Wheat

13%Sorghum

7%

Millet

5%

Maize

5%

While public sector companies produce seeds locally, private sector

companies produce seeds only where the agro-climatic conditions

are most favourable and transport the seed wherever required,

ensuring greater economies of scale

The public sector produces self pollinated crops, of which wheat

and rice account for about 60 percent. The private sector deals

with mostly improved hybrids and high-value, low volume seeds.

Vegetable seeds account for about 18 percent of the total production

of certified seeds.


0

5

10

15

20

25

30

35

40

45

50

R i c e

W h e a t

S o y b e a n

C o t t o n

S u n f l o w e r

M a i z e

B a j r a

J o w a r

T o t a l C r o p A r e a ( 0 0 0 h a )

0

10

20

30

40

50

60

70

80

A r e

a w i t h c o m m e r c i a l s e e d

( F i e l d C r o p s )

1:8

0

100

200

300

400

500

600

700

800

900

1000

C a b b a g e

L a d y f i n g e r

C h i l l i

B r i n j a l

T o m a t o

W a t e r m e l o n

T o t a l C

r o p A r e a ( 0 0 0 h a )

0

10

20

30

40

50

60

70

80

90

100

A r e a w i t h c o m m e r c i a l s e e d ( V e g e t a b l e C r o p s



The seed industry in India is changing rapidly in response to

policies and technologies. oreign companies have concentrated

on maize and sunflower as their access to international germplasm

gives them a competitive advantage. Cargil is now the largest

supplier of maize seed while Advanta, Pro-Agro and Cargil

dominate the sunflower market. oreign companies have alsoconcentrated on hybrid varieties, which now account for around

60 percent of the market.

Of late, some foreign companies are trying to takeover or get into

alliances with Indian seed companies. or example, AgrEvo (part

of Aventis Schering) has acquired the Delhi based ProAgro group

of companies. The other trend seen in the Indian seed sector is

the emphasis on transgenics. Monsanto has taken a 20 percent

stake in Mahyco, Indian largest seed company and the two have

set up an alliance to enter the transgenic seeds market. The

department of Bio-technology has given permission to ProAgro,

Monsanto-Mahyco and Rallis India to test genetically improved

brassica, mustard, cotton and chilly plants. Added to this, variouscompanies are setting up alliances for distribution of seeds. Cargil

distributes its seeds through Rallis India. Unicorn Agrotech has

taken up the contract production of seeds for foreign companies.

SOURCES O. SEEDS .OR .ARMERS

In India and also most of the South Asian countries, a major

portion of the seed used for cultivation is farm-saved seed. Only

about 7% of wheat and 13% of Rice seed planted in India is

certified seed. The farmers have a range of seed sources. They get

seeds from the public sector seed companies, private seed

companies and local level seed sources, etc.

The trends in the performance of private seed companies showsthat the presence of hybrids have been increasing in different states

of India.

SHARE O. PRIVATE HYBRIDS

Table:5 Number of Hybrids in major field crops marketed

by private & public sector

Crop Private Sector Public Sector

Cotton 150 15

Maize 67 03

Bajra 60 06

Sorghum 41 05Sunflower 35 06

Hybrid Rice 12 04

VEGETABLE SEED BUSINESS

A study conducted for South-East Asia and South Asia (India,

Philippines, Thailand, Indonesia and Vietnam) by AVRDC has

highlighted the following scenario of vegetable seed business.

Cucurbitaceous crops are the most important in terms of sales in

the regions surveyed, followed by solanaceous and root vegetables.

About 92% of the seed companies have established Research and

Development (R&D) wings and the rest of the companies are in

the planning phase. 36% of the companies have R&D budget

below 5% of their total budget, 55% are in the range of 5 to 20%

and only one company has a budget of above 20%. The allotted

budget is mostly confined to developing new varieties and hybrids

and local and international markets. 33% of the companies have

outreach programs having substations or branches in foreign

countries.

Major constraints faced by the vegetable seed industry

Seed companies see weak R&D and opening up new markets as

important and prominent constraints. Training of professionals,

quality control, and application of new technology were also cited

as important constraints whereas cost of seed production andlabour were not cited as serious constraints (Table-6). urther, the

technical services needed by vegetable seed companies as perceived

by survey respondents is furnished below (Table-7).

Table:6 Constraints faced by seed companies, as perceived

by a survey in South East and South Asia in order of

importance

Constraint No.of companies

that responded

New variety/product development 11

Opening new markets 10

Training of professionals 8

Quality control 7

Application of new technology 6

Quality authentication 5

Shortage of manpower 5

High cost of seed production 4

unding and credit 3

High cost of labourers 3

Other (availability of germplasm) 1

Table:7 Relative importance of technical services required

by seed companies as perceived by survey respondentsService No of companies

that responded

Evaluation of disease resistance 10

Special seed production 8

Disease identification 8

Evaluation of insect resistance 8

Molecular tools 7

Identification of vegetable varieties 7

Purity tests of vegetable varieties 6

Plant nutrient analysis 6

Others 1 4

1 Supply of germplasm, screening and improving cucurbit germplasm, and gene bank development

Most of the respondents chose evaluation of disease resistance as the most important technical service

required by the seed industry

Market share of key Indian players

Others

67%

Mahyco

9%

Novartis

2%

Nath

3%

Pioneer

3%

Indo Am

3%

Proagro

6%

Cargill

3% JK

1%

Advanta

1%

Mahendra

2%





EXPORT-- IMPORT SCENARIO O. INDIA

Currently, the total seed export by India stands at Rs.80 crores, which is negligible considering the volume of the international seed market.

Table:9 Indias exports of seeds (Quantity: MT; Value: Rs Lakhs)

Seeds of/for 1994-95 1995-96 1996-97 1997-98

Quantity Value Quantity Value Quantity Value Quantity Value

Potato 10,058.20 668.84 1,093.11 79.41 472.80 61.37 431.64 46.90

Wheat - - 7,180.00 655.71 53461.00 3279.15 - -

Maize 698.00 47.02 2551.00 208.00 14852.80 1168.26 636.45 85.99

Sugar beet - - - - 8.00 3.60 5.50 0.69

Other beet 20.00 80.05 0.20 0.19 - - 8.28 2.91

orage plants 590.16 53.31 19.49 13.50 265.20 31.21 756.64 148.73

Herbaceous plants 65.15 36.53 42.72 219.92 36.00 237.12 124.16 198.53

Cabbage 35.35 15.79 128.07 50.06 43.90 15.48 29.65 21.71

Cauliflower - - 3.66 2.48 1.28 5.90 0.19 1.08

Onion 12.15 3.58 8.53 25.60 - - - -

Pea 55.01 11.10 6.51 2.66 91.40 10.58 10.95 48.32

Radish 61.54 13.40 176.68 42.32 145.48 43.68 87.14 23.04

Pomegranate 7.37 4.98 4.93 4.43 8.81 5.74 14.43 10.75

Tomato 20.75 492.65 27.97 1016.73 33.12 1720.22 51.89 1889.33

Tamarind 2736.89 174.37 2718.20 189.58 2415.76 212.16 1174.36 138.95

Chilly - - 108.97 28.00 - - 600.01 137.31

Misc. Vegetables 1944.75 778.31 3793.21 1366.84 1111.21 836.58 3454.84 4110.67

Misc. fruits 3.77 18.07 56.91 72.89 18.70 236.74 10.23 54.12

Other seeds 734.09 595.35 1502.62 1154.77 1029.80 1065.07 1491.22 1077.69

Total - 319334 - 525143 - 894287 - 799672

Players Sales (Rs Crore)

Indo American 36

Mahyco 24

Namdhari 16


Novartis 15

Century 15

Pahuja 15


Sungrow 12

Nath 10

Others 85

Table:8 Major players in the vegetable seed business

Source: Agriculture Today, January, 2002



Table:10 India's Imports of Seeds (Quantity: MT; Value: Rs Lakhs)

Seeds of/for 1994-95 1995-96 1996-97 1997-98

Quantity Value Quantity Value Quantity Value Quantity Value

Oil palm - 112.94 9.00 127.94 6.72 164.78 64.92 45.38

Sugar beet - - 8.25 21.51 110.00 35.04 - -

Other beet - - 2.52 9.57 - - 0.79 3.91

orage plants 23.81 10.68 111.00 40.15 528.60 168.48 1.92 2.43

Herbaceous plants 1.15 19.02 2.94 61.81 26.70 18.35 4.68 34.06

Cabbage 16.20 294.87 13.98 318.96 11.00 176.69 22.23 763.24

Cauliflower 8.16 60.38 2.25 21.31 2.60 25.11 1.64 108.83

Onion 0.02 0.22 0.99 8.40 2.30 24.09 3.22 40.80

Pea 0.23 0.32 1.98 2.53 - - - -

Radish 27.83 41.01 20.65 26.26 27.60 17.56 0.05 0.06

Pomegranate - - - - 4.00 0.41 171.21 19.32

Tomato 0.31 21.88 0.34 19.49 1.50 67.07 1.10 94.11

Misc. Vegetables 210.47 1493.33 258.63 1253.37 148.50 1070.53 179.15 1582.26

Misc. fruits 0.80 3.42 13.65 59.66 0.60 6.09 15.39 142.53

Other seeds 10.95 146.83 29.76 152.11 11.90 212.25 19.98 201.05

Total - 2091.97 - 2123.07 - 1986.47 - 3037.98

Source: Agriculture Today, January 2002

DEMAND .ORECASTING IN SEEDS

Inadequate estimation of demand and the consequences of over

production or under production can cause serious financial

consequences for a seed company. Too many carryovers and stock write-offs will prove to be expensive, while lack of seed means a

loss of revenue and a source of frustration for the sales force and

the dealer network.

This combination of special features in the seed industry makes

the accurate assessment of demand even more critical. Some of

these features are:

l Longer period of time for the development of new products

from breeding programmes

l Seasonality of production

l Production subject to variables like agro climatic conditions

outside the control of management

l Statutory controls and quality standards

l Existence of a generation system - whereby the production in

one year is the progenitor of the next

l Limited shelf life and loss of germination

l High volume: Low value ratio of some seed crops like cereals

makes long distance transport and long-term storage

unattractive.x

In demand forecasting, the first step is to calculate the existing

requirement multiplied by percent bought seed, which is the

amount of commercial seed purchased by farmers.

In calculating seed requirement, seed multiplication rates must be

taken into account, i.e., the difference between a crop grown for

grain or forage, the difference between irrigated and dry land, the

difference between a crop, which is sown directly or transplanted.

It is also important to define the various categories of seed that

exists in the market, as understanding of these segments will

assist in the assessment of demand.



Table:11 Seed multiplication ratio (MR) of various crops

CROPS SEED RATE (kg/ac) MULTIPLICATION RATIO

CEREALS & MILLETS

WHEAT 40 1:20

PADDY 20-30 1:80

MAIZE () 4 (M) 2 6 1:100 (HYBRID)

1:80 (VARIETIES)

SORGHUM () 3.5 kg (M) 1.5 kg 5 1:100

BAJRA (f) 1.5 KG (M) 0.5 kg 1.5 1:200

Ragi 5 1:80

PULSES

BENGAL GRAM 6 1:10

URAD (BLACKGRAM) 6 1:40

MOONG (GREEN GRAM) 6 1:40

ARHAR (RED GRAM) 4 1:100

LENTIL 16 1:30

PEAS 24 1:40

HORSE GRAM 5 1:40

MOTH BEAN 6 1:40

OIL SEEDS

GROUNDNUT 60-80 1:8

RAPE AND MUSTARD 2 1:100

SOYABEAN 25 1:16

SESAME 6 1:250

SALOWER 5 1:60CASTOR () 3.5 kg (M) 1.5 kg 2.5 1:60

CASTOR VARIETIES 2.5 1:60

LINSEED 10 1:50

IBRES

COTTON VARIETIES 2 1:50

COTTON HYBRIDS (Delinted uzzy) 0.6 1:250

COTTON HYBRID(Linted) 0.7 1:300

JUTE 1 1:100

MESTA 6 1:40SUNHEMP 10 1:30

ORAGE

BERSEEM 8 1:10

LUCERN 4 1:25

OATS 25 1:15

ORAGE SORGHUM 2 1:100

TUBER CROP

POTATO 600 gms 1:4

VEGETABLES

BHINDI 1-2

CHILLIES 0.5 kg



.ACTORS WHICH A..ECT DEMAND

It is important to distinguish between actual demand, perceived demand and what the

government expects the farmers to buy. The total amount of certified or labeled seed sold

may be quite a small proportion of the total requirement.

Many factors have to be considered while assessing and forecasting demand. Some of these

are:

l Cropping pattern and intensity

l

Type of seed usedl Climate

l Demand for crop products

l Market scenario

l Disposable farm income

l Rate or level of adoption of new technology

l Government policy

l Crop cycles

l Habits and tradition

l Product performance

l Competitiveness

l Price

l Promotion

The most important factors that need to be taken into account when an individual company

or organization is estimating the market share that may be gained by its own products are

product performance, competitive positioning, price and promotion. This will form the

basis of sales forecasting and production planning.

Table:12 Seed Replacement Rate of major vegetables

Crop SRR (%)

Brinjal 63.4

Cabbage 100.0

Cauliflower 86.4

Chilli 83.7Gourds 73.5

Melons 89.2

Okra 92.4

Tomato 99.3

Beans 62.2

Onion 87.3

Peas 93.5

Others 72.6

SPICE is Published by

The Director General,National Institute of Agricultura

Extension Management (MANAGE)Rajendranagar, Hyderabad-500 030, India.

Tel: +91 (0) 40 4016702 706,

ax: +91 (0) 40 4015388

Website: www.manage.gov.in

Source: Agriculture Today, January 2002

Editor-in-ChiefShri. A.K. Goel

Series EditorDr. Vikram Singh

Co-ordinating EditorLakshmi Murthy

Documents

19837646 Seed Business Indian Scnerio